According to reports, Spain was in talks with the euro zone leaders over conditions for support to bring down its interest rates. Though nothing official in terms of specific amounts or concrete decision had been reported, this dampened the market confidence since it was taken as an indication that Spain's economic condition was worsening.

Investors felt that request from Spain for a financial support was only a matter of time as borrowing costs remained unsustainable. Spain will likely continue to wait for the ECB meeting on 6 September to know the modalities of the ECB market interventions, unless a sharp deterioration in market conditions until then, Credit Agricole said in a note.

Greek Prime Minister Antonis Samaras will meet German Chancellor Angela Merkel Friday in Berlin. Samaras is expected to provide Merkel with greater detail on how Greece will achieve the proposed 11.5 billion euros ($14 billion) of savings demanded by the Troika, which consists of the European Union, the European Central Bank and the International Monetary Fund.

Samaras is expected to provide the two leaders with greater detail on how Greece will achieve the proposed 11.5 billion euros ($14 billion) of savings demanded by the Troika.